question
Total Revenue
answer
The amount a firm receives for the sale of it's output
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Total cost(TC)
answer
The market value of the inputs a firm uses in production
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Profit
answer
Total Revenue minus Total Cost
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Explicit Costs
answer
Input costs that require an outlay of money by the firm
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Implicit Costs
answer
Input Costs that do not require an outlay of money by the firm
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Input
answer
Inversion, outlay, investment
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Economic Profit
answer
Total revenue minus total of both explicit and implicit costs.
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Accounting Profit
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Total revenue minus total explicit cost
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Production Function
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The relationship between quantity of inputs used to make a good and the quantity of output of that good
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Output
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Production
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Marginal Product
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The increase in output that arises from an additional unit of input
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Diminishing Marginal Product
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The property whereby the marginal product of an input declines as the quantity of the input increases
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Fixed Costs(FC)
answer
Costs that do not vary with the quantity of output produced
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Variable Costs(VC)
answer
Costs that Vary with the quantity of output produced
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Average Total Cost(ATC)
answer
Total cost divided by the quantity of output
question
Average Variable Cost(AVC)
answer
Variable cost divided by the quantity of output
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Average Fixed Cost(AFC)
answer
Fixed cost divided by the quantity of output
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Marginal Cost(MC)
answer
The Increase in total cost that arises from an extra unit of production
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Efficient scale
answer
The quantity of output that minimizes average total cost
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Economies of Scale
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the property whereby long run average total cost falls as the quantity of output increases
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Diseconomies of Scale
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the property whereby long run average total cost rises as the quantity of output increases
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Constant Returns to scale
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The property whereby long run average total costs stays the same as the quantity of output changes
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What is modern microeconomics about?
answer
Supply, Demand, and Market equilibrium
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Supply and Demand are the two words that?
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Economists use most and make markets economies work
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What is a Firms Objective?
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The economic goal of the firm is to maximize profits
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What's a firm's cost of production?
answer
all the opportunity costs of making its output of goods and services.
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What does a firm's cost of production include?
answer
Explicit and Implicit Costs
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What cost is it if Jane know a lot about computers so she does the work herself instead of paying someone but loses money for the firm to put out?
answer
Implicit Cost
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If Jane pays $100 for flour what cost is that to her firm?
answer
Explicit cost
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What do Economists measure and Accountants measure?
answer
Economists=economic profit, Accountants=accounting profit
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When does a firm make an economic profit?
answer
When the total revenue exceeds both explicit and implicit costs
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What example is, as more workers are hired at a firm, each additional worker contributes less to produce due to the firm having limited amount of equipment?
answer
Diminishing Marginal Product
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A firm's total cost is the sum of?
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Total fixed cost(TFC)+ Total Variable Costs(TVC)
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What cost is, When Jane rents a place for her factory, the cost of rent will be the same regardless of the amount of cookies she produces?
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Fixed cost
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What cost is, The more cookies Jane produces, the more flour and sugar she will need to buy?
answer
Variable cost
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What would the average cost of a coffee shop be if the shop produces 2 cup of coffee per hour and its total cost is $3.80
answer
$3.80/2=$1.90
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What is Jacks MM if his TC now for 3 cups is $4.50 and before it was $3.80 for 2 cups?
answer
$4.50-$3.80= $0.70 MC for third cup
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What's the Average Total Cost if the rent cost was $500 rent, the flour and sugar cost was $100 and Jack produced 50 cookies
answer
ATC= $600/50= $12 to produce 50 cookies
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T of F: Excludability implies that a person can be prevented from using a good?
answer
True
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T of F: A free rider is someone who receives the benefit of a good and is willing to pay for it?
answer
False
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T of F: National defense is an example of pubic goods?
answer
True
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T of F: Public goods are neither excludable nor rival in consumption?
answer
True
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T of F: Goods without prices do not provide a challenge for economic analysis?
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False
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T of F: The amount a firm receives for the sale of its output is known as total cost?
answer
False
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T of F: Explicit costs are input costs that do not require an outlay of money by the firm?
answer
False
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T of F: Economists measure a firms economic profit as total revenue minus total cost, including both explicit and implicit costs?
answer
True
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T of F: The production function shows the relationship between quantity of inputs used to make a good and the quantity of output of that good?
answer
True
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T of F: Variable costs are those costs that do very with the quantity of output produced?
answer
True
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